A damaged credit file feels like a locked door. In practice it is usually a more expensive door, and the price depends on choices you can control.
What counts as bad credit in Canada
On the Equifax scale of 300 to 900, roughly 760 and up is excellent, 725 to 759 very good, 660 to 724 good, 560 to 659 fair, and below 560 poor. Lenders generally treat under 660 as subprime. There is no legal cutoff, and each lender sets its own floor, so a single declined application tells you very little.
What subprime lenders actually weigh
Once your score is below prime, lenders stop leaning on it and start looking at stability:
- Income. Steady, provable, and enough to carry the payment comfortably.
- Time at your job. A few months of history at the same employer carries real weight.
- Bank statements. They look for rent and bills clearing on time, and for NSF fees.
- The vehicle itself. A sensible, affordable car is easier to approve than a stretch purchase.
- Down payment. Not always required, but it improves both approval odds and the rate.
What it costs
Expect a meaningful premium: where strong credit gets high single digits on a used vehicle, a subprime file commonly sits in the mid-teens and can go higher. Federal law caps the criminal rate at 35% APR, and Quebec applies extra requirements above its high-cost credit threshold. Anything approaching those numbers deserves a hard second look.
One Quebec detail worth knowing: the credit rate shown on your contract is an all-in figure that includes administration fees, not just the nominal interest. That makes contracts genuinely comparable, so compare that number rather than the payment.
New to Canada with no credit file
No credit history is not bad credit; it is an empty page, and lenders treat it differently. Some banks run newcomer programs that skip the credit-history requirement, usually with a down payment in the 10% to 25% range and limits on how old the vehicle can be. Those vehicle-age limits are the catch on a used-car lot, so newcomer buyers often do better with a specialty lender or a co-signer.
Do not let the term hide the cost
The easiest way to make an expensive loan feel affordable is to stretch it. Going from 48 months to 96 cuts the payment substantially and more than doubles the interest, while keeping you underwater for years. If the payment only works at 84 or 96 months, the honest conclusion is usually that the car is too expensive, not that the term is too short.
Use it to rebuild
A subprime auto loan reported to the bureaus and paid on time is one of the faster ways to repair a credit file. Many buyers refinance to a much better rate after a year or two of clean payments, and in Quebec an instalment sale contract must let you prepay without penalty, so leaving early costs nothing.
Protect yourself
- Financing cannot be a condition of the sale in Quebec, since November 2024.
- Extended warranties, credit insurance and protection packages are optional. Every one of them increases the amount you finance.
- Compare the total obligation, not the weekly payment.
- Get the approved rate in writing and check it against the contract.
- You may repay early without penalty, and the contract must say so.
Talk to us honestly
Tell us the real situation and we will tell you what is realistic. Call 514-824-9117 or read how financing works at Automobile SX.
Information on this page reflects Quebec rules as of August 2026 and is provided for general guidance only. It is not legal or financial advice. Rules and fees change; confirm current details with the Office de la protection du consommateur, SAAQ or Revenu Québec.